Any home based business success stories out there?

[73-Driver]

Ok, Educate me. Why are interest only loans so bad.

Sure there is risk that the market could go down. NOT likely,(stagnate maybe) but outside of that, If you can afford the payment - where is the risk?

Why are interest only loans BAD?

Some people are using these as a crutch to buy more than they can afford only making the interest payments each month. This could be a problem if you buy in an area that is overvalued and that market corrects itself and you are forced to sell (job loss, death in family, etc...) you end up losing money on the sale. Not a good investment. I think timing is the critical factor here. Get out when the markets hot before your losses grow if you are not paying down any of the principal.

 

[81Horse]

You could end up underwater with a conventional mortgage, too. I don't think the IO options, and the many forms of ARM's, are necessarily bad -- depends on the market, and on how long you plan to be in the house. If you do plan to stay for at least 7 to 10 years, and you pencil out your numbers, a conventional mortgage is probably the way to go.

Of course, you can always refinance any kind of mortgage, if your plans and/or circumstances change.

I think the worry now about the IO loans is just what 73-driver says: people can get trapped with high payments, in a sinking or flattening market, and have to sell at a loss. Which could, of course, happen with any type of loan -- but theoretically, you could afford to wait out the market if you had qualified for, and were making payments on, a conventional mortgage.

 

[MDP727]

The typical problem with interest only loans lies in the terms. Usually in three years the interest rate becomes adjustable and the home owners payments will climb. During this real estate boom many people bought homes they really couldn't afford. They bought or were sold on the idea of the payment being affordable so the house is. Just like a lot of people and new cars. These bigger homes come with higher heating and cooling bills, higher taxes, higher insurance. Couple that with a rising payment and the problem begins. For the final nail in the coffin they get lines of credit on these homes or seconds and just aquire more debt.
Just another note, I purchased a REO property last Feb, it did have tax leins on it. The bank did clear them up. After doing this full time for a year now I've found the REO properties(at least in FL) are getting hard to purchase at a good price because the banks are listing them at market value and sitting on them instead of dumping them. I sold two forclosures this year. Bought one for 114 and sold it for 159. The other for 108 and sold for 179. I didn't do any work to these because I don't want to be a construction man. However The first house I mentioned the buyers dumped 40 into it and now it's worth 245. The second one they dumped 30 into it and it's worth 235 now. I made good deals for my buyers and made good money myself with minimal effort.
I have two other houses and a duplex all rented. I have two office buildings with 22 rented offices. I'd just like to say it's work staying on top of everything, however it's nice being home and having my own schedule.
I've used most of the guru's books and been to some seminars. I've applied teachings from John Reed, Carlton Sheets, Russ Whitney, and Robert Kyosaki.(probably messed up his last name) I think they all have good points to offer and a lot of BS each.
Take care

 

[DH2WN]

I haven't read any of this thread but my response to the initial inquiry is day trading. I make more a day trading stocks then I do in a week flying for SWA. Everyone always asks me if I am picking up opentime. Although I know it's good for productivity and I get 2nd year pay, being at work actually makes me lose money because I'm not in touch with what is going on with the market during the day.

However, if you don't know anything about the stock market you can lose your savings pretty quickly.